Terre Haute Daily Gazette, Volume 1, Number 187, Terre Haute, Vigo County, 7 January 1871 — Page 1

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.SATURDAY, .J A X17 A 7, 1871

e,t A(^ S: -z-1 OF

GOVERNOR CONRAD BAKFJi.

Pciivejvd January 0. l'~71.

G'.iil'Cui' ii uj' the Xenafc

and Home ofi

I-'iiK'C* I}'* last w]jo i:'nmcriL of tlic fi'ei)er.il .\s-ciiiMy the Divine Providence has .-oniititit'-'i tu smile upon the State, aij:i the year that hasjus olos.'d, has been crowiit'd wit many blessings to her people.

STATK DEI'.T.

JUT.:•(]: me great pleasure in again online the l?epi'e.-ent.ativos o!' ilie people to these Hails of Legislation, to gre'-t you at the outset with tiioa,s:ir:uiee ii ir. I iie financial erudition of the State, so :it 4 as. the liquid ition of our foreign inilebtednc^'j is concerned, i.-miosi itisia'-iory. I'nictieaiiy, all the foreign dobr of the ,Stale, except $178,00'» of the war !:sn bonds issued under the legislation ..f l.v lists been sedeenied. IS early a Co!.iSinnti'n of such a result was not nnti'-ii) i!''i two ye.Ti's even by the most m^uine. it wastin-u believed that tiie eo!h*clioi! and application of therovenue for t!i-- yvi'iI* I'"*70, would be necessary to complete tiie redemption of the .-ind per cent. cerlilicates oi S'a'o stock niitsin siding, end eousif jih-u? !y hii a portion (ho-'..- stocks would have to limn- in hear interest until the summer lull of ls i. The result achieved is dm- to the fae:. thai .June last I received Iniiii the Tre isinw epnr{moiit lie.*i i(ciI St'i!c- o!I ai*rouni of lie 1! th nMailmeuf of ••idianu war el iim.s again tie- I'nited Siaii's, a draft or warrant on the As.-i.-tanl 'lYra-nrer of the i'nited Stales, at _\"cw York, payable to my my four

capacity, for the

hundred and MXty-four hundred and twenty-throe twenty-four cents iSllV •iral'i or warrant 1 immedi-a-to make it payable

a in

a a •. W !!("V

a in in I I is

I lie State deli of the

war io bonds of presented, and, seoui

Mnkiiur State of

Indiana, upon tiie joint, iiidorsemeu•. ol IVatiian Kimball, Treasurer of S ate, and TiiomasC. Slaughter, Ag'.Mit ol State, transmitted the warrant thus indorsed

by de hands o. thy_ lensuiei State )f

tion of the 2] and ii ve per cent, certificates of .stock still outstanding*, 'rise proceeds of the draft were applied accordingly, and hence the favorable condition of our foreign indebtedness before ill Mitioned.

The Auditor of Stale, in his report, shows that at the end of the fiscal year, on the 31st day of October la^t, the foreign indebtedne.-K of the State amounted to sr. ,21.and the domestic indebtedness to s:,7.14,2!7.H2, making a total ol S4.1 ii7,4S7.0l. Of Die Si^i,2K).12 finis rejiorted, tilt sum of $231,210.12 consisted of".3 and 2' per cent, (•."rtiiicates of State as follows iir» ,m is

Stocks (rendered,

ceil

"New York foi

Agenev

iem

myment on or before the 1st day of September, 1870, and that in default of such ^resentment the State would cease to May interest thereon after said last mentioned date. Tho interest on the 2} per cents, had heoa stopped long before by the Board because of their non-present-ment for payment under alike notice. As the money is, and has been in the Treasury of the Agency at Npw \ork for ,+ he redemption of ail these five and two ,l one-half per cent, stocks still unsurrvndtu'ed, and, as the State has done all $ hat can be reasonably required to procure their surrender, they should be treated and considered as practically paid and to that end I recommend that the General Assembly ratify, if saieli ratification shall he thought necessary, the action of State J)e\t_ Sinking Fund mmissioners in stopping the interest on those .3 and 2,V per ceni. certificates.

Since the end of the fiscal year, and vv to January *"»th, 1*73, tho following State stocks have been redeemed, viz:

i11icinu' mom !SW"vIll„. tkU(

.SI'Ki,! unsur 1'''' ount

O the .3 per cent, certiiicate.s 10 reducimr the amount still dered to sM2,?.00. Of the 21 tr4,2os.K!, reducing the isurrendered to s:j,7-j2.

I'O'niized lorei'jn deltt ot the Sui i-ds of War of 817S.OOO.

nts, still

Of he war loan bonds the amount- of the-o bn?i!i iw to the sum of S17S 00 i. tie principal of the war loan will not be due for many year tu-refore the State can neither compel «iudr surrender nor stop the interest horoou. Treating the 3 and 2.V per cents. practieajlv paid for the reasons already

0 reducing 1 oii'sinnd-

ids in

it "follows that the entire re-

01-

aniottnl

iaii B.uul.s flic

D.)in"sii( debtof iiie rttaie nas .saw-....vw been increased since the end of the fiscal and Erie (. ana could £ar. l.v li.o ^lljfjr (jjo "llM id 'Siale

debt of (he State ha

indelitednoNS,

wild nionu^ IK

ioiming to the Sinking 1* und from c**,* 7.11 2!7?S*2 toS',7i»2,t50!.i.3. It follows therefore that he debt of the State, I'oi'eign and Domestic on the oth day of January, ls7l, iv be stated thus, viz

I'onrcrc.x nEirr.

AVar Lmn V.oiidf DOM 1TIC PEtrr,

tonn l''lc bor.il

w..hIS ,l Ku:..t.

5L7.S (lAO 00

!,:UG 15

Hpi'tuMl 01 or NY I bond has

(or win

dempUwii nou-iiogotmblu ho^n irivoiAo school £"1U' ino niK-s t'niversit.Y Bond.!:otai r'Minestio Delt Krnire Foi eh and Jionu^tKtii Mi^iJtU day ot Januaij.lo/1

yet

«T\TK AUEN-OV AND HOAUl) OK STATE »K»T SINKING FUKPCOSIMISSIOXEKS. The Act approved, December 21st, 58(53, iMuutnonly Biil. provide? for the lice of Agent of State as soon as all jive and two aud oaer-a/ilf per cent. {Scutes of State Stock shall bp redeemed ttnd canceled.

The probability is that .some eev therefor^ agency under this legislation woulu perpetual. ..

fliHeateshave been destroyed, and win, erel'ore, never be presented if so, the umlor this loirisiation WOtllU be

There is no longer any necessity lor the State Agency," or for the Board of State Debt Sinking Fund Commissioners, and I therefore recommend that both be immediately dispensed with. There will be no injustice or impropriety in requiring the holders of the few remaining certificates to receive their money at the Treas-

B'v reason of the application of the moiiflV received from the United States Io

tiie

redemption of our foreign debt, as before stated, the ten percent. tetateDebt W,nkinv K.uud tax for J870, will not be reauired when collected for tno purpose for which it wajs levied. It will amount to over §009,000, ami as tlje law pojr

stands would zo into the hands of the Board of State Djbt linking Fund (Commissioners. Provisions should be made for co ntituthur the proceeds of this tax apart of the General Treasury- of the State, to be appropriated as the General Assembly may direct.

OLD INTERNAL IMPROVEMENT' BONDS. I In the foregoing statement of the indebtedness of the State, I have included as apart thereof one hundred and nine-ty-one (1011 old Indiana bonds issued for

Internal Improvement purposes prior to the year 1841, ail# upon which no inter-

ias eou )e

State since said

II it mentioned year except as hereinafter suited. All of these 191 bonds are beiieved to bj what are technically kuown as internal Improvement Bonds—that i-, bonds issued under the General Improvement Act of January 21, ]830, except sixty-nine of them. These sixtynine bonds last mentioned are Wabash a 1 rie Canal bonds litld by the United Sf .ues as an investment for certain Indi mi tr 'o s. .n:l the interer-.t thereon was

!ii Xove.liber, 1SGS, settled up to the first day of July of that year, by the government witholding and applying to that purpose so much of the audited and allowed war claims of the State as was necessary to pay such interest, as is fully explained in my regular message delivered at the opening of the last General Assembly, and to which you are respectfully referred.

A part of the 101 bonds before alluded to are dollar bonds and a part sterling bonds, but the precise number of each kind I have been unable in ascertain. The dollar bonds are for S!,(U) each, payable in Xcw York 'ity, and tin- sterling bonds are for two hundred and twenty:ive 'pounds sterling each, payable in London. The bond.- may be safely estimafed at $101,00(1, exclusive of interest and exchange. John \V. Garrett, Ivsfj

of Baltimore, is represented to owner of 41 of these JS'l bonds ten of the li being sterling bonds and the residue being dollar bonds. Mr. Garrett, soon after tiie adjournment of the last Special session of the General Assembly, as the holder of these 41 bonds, commenced an action in the Circuit Curr of Carrol! county, in this Slate, against the Board of Trustees of the Wabash fe Erie Canal for the pin pose of enforcing' against said 'anal and its revenues in the hands of said Board of Trustees, a lieu on the (.'anal which he insists was created to secure the payment of said bonds by the provisions of the General Internal Improvement Act before mentioned.

The suit is brought not only for the

.. rn .. j* t- I H" 'M!tl Xn UiWUklU iiWl/ UUJ HU ta

(ho

Lie-\g"nt, Of flu. '-•i1 (it of all other persons standing in tin that the procerus ot j^ralt .slioikl »e

piajutitf but for the bene

same rc.[ (ipm am

applied in rei.e.oiisng, fa -,., suc.i ot t.K after I was informed of the pond war io bonds ot tiie S:aie as might be

fi,

tie as might to the redemp

holding similar bonds

..r.c..,, ...,1

pend

ency of this action, I procured a transcript of the record thereof with a view to considering what steps, if any, were necessary to be taken to protect the interests of the State in relation to matters connected with the litigation.

Upon an examination of the General Internal Improvement Act of January 27,].S0i and the case of the Trustees of the Wabash and Erie Canal vs. Beers, decided by the Supreme Court of the United States in 1802, and reported in 2d Black's Reports, page 4IS, I became satisfied that the bonds issued by authority of said act were, by the 0th section thereof, charged as alien upon the public wor. sof the State, including the Wabash and Erie (.'anal, or at least that part of it which is situated below or .south of tho mouth of the Tippecanoe river. In ins view of the subject, it became my "Uo tu If rendition of any decree under

Board of Trustees of the Erie Canal could be di

vested of tho control of the Canal or its revenues until after the meeting oi the General Assembly, so that provision might be made to protect the trust and the interests of theStateiu any and every possible contingency that might arise. Accordingly I employed counsel, and attended in person, accompanied by such counsel, and co-operating with Hon. D. D. Pratt, who acted as the attorney of tiie Canal Trustees, a defect of parties defendant was pleaded, in omitting to join the present owners of the other public works embraced in the lien. Tl is course rendered it necessary that the blring

1 is UUIUMJ it'uui:icu 1 V..WV he plaintiff should continue the cause to the additional parties before the

'-.-r,

court, and it was continued to the i'ebrttary term, 1871, of said court. The White Water Valley Canal, twentyseven miles of the south end of the Madison and Indianapolis Railroad, the New Albany and Yineeunes Turnpike Road, ami that part of the northern division of the Central Canal which is situated in Marion county, are all included in the lien, and all of them, except the White Water Valley Canal, having been aliened by the State", conveyed tho Wabash and Urie Canal to the* Trustees under the littler bill, it follows that they would ive to be applied to the satisfaction of the lien before the Wabash and Erie Canal could be subjected to the payment of anv portion of i-aid lien.

The White Water Valley Canal was aliened before the Wab.tsh and Erie Canal was transfored to the Trustees, and consequently said last named canal would be liable in equity to be subjected Io the satisfaction ot the common 'ire the White Water Canal he

reached. 1 suppose it is certain that the other works liable to be subjected to the atisfaetion of the lien before the Wabash be reached would lien, and if they would that the State having sold the=e other works for a valuable consideration, ou'dit to protect the.m from the enforce ment of Uiislien against them. If these bonds are alien on the Wabash and Erie Canal, us I believe them to be, the Slate cannot alt'ord to permit the title ot the Trustees to be divested or their possession and control of the canal and its revenues to be interrupted by the judicial enforcement of said lien. To prevent this, provision should be made to pay out of the Treasury of the State such of said 101 binds as may be adjudged to be alien on the Canal and its revenue whenever it 'l'OS

H1jmay

377.7.10 1. 1 1 3T 070.010 15

l!0

lien

cntldbi'

become necessary to make such

naymeut in order to prevent the canal or Its'revenues from being subjected to the satisfaction of the lien. Indeed independently of this lien altogether, 1 do not see how the State cau honorably refuse to redoem these few outstanding Internal

nl', re fi'.'bt I Improvement Bonds. They were issued a'bolittoi^of the of-1 by ^he State and" "fte faith of the State the

cei

of those

was pledged for their redemption, and this pledge cannot be disregaraed or eat aside without the consent of both parties to the contract if the State has the ability to rodeej.'}) the pledge, of which there can be no doubt. If the holders of the bonds had surrendered flipf# ur»d6f the Butler Bill as other holders surrendered theirs and asree^ 1°°^

excll

s'ively to

i£e revenues of theQml for one half of their debt, this would bare been & pew contract, and

the

State could not be

justly complained pf for insisting on execution. But the holders of t})e bopds now under consideration have continuouslv refused to surrender them under the adjustment proposed by the Butler Bill and the State oannot OOfSpgl them to do so, nor can she refuse to pay theui without repudiating her plighted faith,

If the State should stand by a»4 permit the Canal or its revenues to be wre«ted from the hands of the Canal Trustees, to satisfy a paramount lien created by the State itself prior to the conveyance of the Canal to said Trustees,

tor which the State is in way bound. I hope that you will promptly adopt such measures as will forever prevent the possibility of the trust being disturbed or impaired by the enforcement of this lieu. It is both riSht and expedient that the Stare should thus protect the trust property and I also recommend that the State relieve the Bard of Canal Trustees from ail the expenses of litigation to which they have been or may be subjected in defending the trust property from the attempt made to subject it to the satisfaction wfsaid lien.

I herewith respectfully submit the professional opinion of Messrs. Hendricks, Mord & Hendricks, the attorneys employed as aforesaid, touching the questions involved in and connected with said litigation, with my letter to them, containing the question to which said opinion is a response.

CANAL DEIJT.

In this connection I desire again to call attention to the renewal of the effort which is about to be made by the holders of the Wabash & Erie Canal stocks.to induce the General Assembly to charge the payment thereof on the Treasury of the State.

This memorial and the accompanying publications entirely concur in the object sought to be attained but, not only disagree but contradict each other as to the basis on which the rights of the memorialists and the liabilities of the State are predicted.

The memorial in several places, either in terms or by the clearest, implication, concedes that by the adjustment of 1847, one-half of the former debt of the State ceased to be a State debt, and

Holders of the certificates of the stock thus charged. 2d. That the State has not, since (he adjustment of 1^-17, by tho incorporation of'railroad companies, and authorizing them to construct railroads within the

Late, or by any othcractof liers, accord-

OUUl, in"- to any recognized rule oi law, or anj established principle of equity jurisprudence, created a liability on her pare to pay said canal stocks, or any part tuereof. In other words, had thesume transactions occurred between two natural persons over whose rights and liabilities the courts could have oxercisrd tho lullest jurisdiction, the claims now urged against "the State could not have been enloreeil as between these natural persons by.au action at law, or a suit in equity.

Before presenting any argument in support of said first proposition, it may be tvell to premise that prior to tho odjustr ment of tho State debt under the IJutler bill Indiana was hopelessly embarrassed, i.p-'indebtedness then beinglargely above and iievoud her ability, present or prospective*. to pay. At the same time, the State owned tho Wabash & Erie Canal, in an unfinished condition, with 800.Q3U acres of land lying within the State, which Congress liad donated to the State to enable her to copaplete satd panal. Under these circumstances it was not a matter of choice, but of absolute necessity that, to enable the State to resume the payment of interest on her indebtedness 1-CvidcU Jm4 ^ep pt]spep(]ed in 1841her treasury must be yedevpd iji some wav from the payment of some part of the debt that was then a charge upon it

The oradifoj.-s of the State, or a large number pf thpm, ponced]ng the existence of this state of affairs, deputed Charles Butler Esq., of Jifew \orfc, to visit the State (Capital during the session of the Legislature and confer with the State Government as to the adjustment of the debt. This brings uie to a consideration of the eyideuce oontained in the negotiations which resulted in the passage oft he Butler l»ill, going

then, indeed might the holders of canal stocks, with some show of reason, claim with, and discharge the State from some that the State should redeem the many portion of the debt. millions ofdollars of Cauai stocks, which, Tiie first allusion to such an adjustment under the existing arrangement, are ex- to be found in our public records is conclusively charged upon the Canal, and'tained in the annual message of Gov.

In 13-37, in anticipation of an attempt which it was rumored would then be made for the accomplishment of the same object, tiie General Assembly passed a joint resolution, approved Feb-j ruary 10, 'lSo7, declaring that the .Legis-1Seerht, lature has no power under the Constitution to purchase the Wabash & Erie Canal, and that if the power existed it would be unwise, impolitic and injurious to the best interests of the people of the

the State to purchase said Canal. This resoluiiun, although not very aptly worded, was intended to anticipate and condemn an expected effort to have the Canal debt charged by legislative action on the State

Treasury. Early in the month of March, 1S.37, and a few days before the adjournment of the General* Assembly, the 'holders of the Canal stocks transmitted a memorial through the Governor to the General Assembly, in which they attempted to show that the State by her own acts had rendered herself liable for the payment of said stocks. This memorial had' been, however, before its reception, anticipated and responded to by ttie passage of the joint resolution before mentioned, and that response still remains on thestatute books as the unrepealed expression of the Legislative will on the subject to which it relates. The holders of the Canal stocks, or their agents, have recently caused anew edition of tiiis same momorial to be printed in pamphlet form, copies of which, with other publications having the same object in view, have been transmitted by mail to all the members of the present General Assembly, as I am informed, and to the Executive onicers of the State, including myself.

1 ,1.0.t-. ^tie Wabash &• Erie Canal, its lands and revenues but insists that, after the making of the arrangement, and by the violation thereof, the State revived her own liability by authorizing the building of railroad, which carried freight and passengers that would have been carried, in the absence of such railroads, by the canal, thereby impairing the revenues of the canal to such an extent as to render it practically worthless as a security.

The publications which accompany the memorial deny the concessions luado by the memorial, and assert that by the adjustment the (State never was released irom her liability to pay that haif of the former debt of tho .State which was charged upon the canal. I propose to notice both of these theories, and in doiirjso I shall for convenience pake submit what I have to say in support of the two following propositions, viz.: 1st. That by the terms of the acts of January 10, 1840, and January 20, 1847, commonly called the "Butler Bill," and the nature of the negotiations which resulted in their adoption and especially the amendments suggested by the principal bond-holders to the first act, aud adopted in the second, the character of the bonds surrendered and the certificates of Canal stock issued and received in lieu thereof and, by tliecotemporaneous and subsequent construction put upon the adjustment by both parties thereto, it is clear that the Canal stocks which the State is now asked to charge upon her Treasury were to be, and were, charged exclusively upon the Wabash and Erie Canal, its'laiuls and revenues, and that the State was not be, and was not bound to pay and portion of these stocks, although she reserved the right to redeem the canal at her option after the expiration of twenty years from the date of its transfer to the Trustees, by paying the principal sum charged upon it to the

VOL. TERRE HAUTE, IND.. SATURDAY AFTERNOON, JANUARY 7, 1871. NO. 187.

the canal and its lands and revenues

Whiteomn, delivered to the General Assembly of the State, December 2, 1815, from which I quote the following extract, premising that the person alluded to in the extract is Mr. Butler. It reads as follows, viz.:

It was said, in a quarter entitled to re-pect and confidence, ata meeting held at Torre Haute, in May last, that, if the State were to pay to her bondholders, by a State tax and otherwise, a portion of her public debt, it was thought that they would be prepared to take the profits of the canal for the balance. The gentleman who expressed this opinion is now in attendance as the representative of our foreign bondholders, and lias verbally advised me that he will shortly prepare a communication offering a liberal arrangement to be iaid before the General Assembly."

Erora this it wili be seen that Mr. Butler, months before he reached Indianapolis, had made the impression on the minds of the people, and of the Governor of the State, that the bondholders would lake the profits of the canal for a part of the debt.

Under the date of December 10, 1843, Mtv I'dtler addressed a lengthy communication through the Governor to the General Assembly on the subject of the State's indebtedness, and the wish of the creditors for an early adjustment. This communication was referred to a joint committee of both Houfes, of which Mr. of the House, was a member, and or" which Mr. Eaue of the Senate, was chairman.

Jit*. Sacrist, in tiie report committed by him from the joint comixti4t.ee to the House of Representatives, s&id that "the general statements c&ntained in Mr. Butler's above mentioned communication to the Governor, were not sufficiently definite for the committee to rest, upon as a basis of any action."

In reply to a resolution of the joint committee informing Mr. Butler of the organization of the committee and its readiness to receive any written proposition from him in relation to an arrangement of theStatedebt, he communicated his first written proposition to the committee, of tho date of December 10, 1845. On tiie 25th of December, the committee informed Mr. Butler, by resolution, of its inability to accede to the proposition so submitted by him. S

On the 26th day of December, 1845, Mr. Butler made his second proposition, which was accepted, and incorporated into the act of January 19, 184G.

Although Mr. Butler did, in that proposition, use language upon which the holders of the Canal stocks now place so much stress, to the effect that he did not I'eel himself at liberty to make any proposals or consent to any arrangement whifh should embrace less than the eventual payment of the jnst claims of the bondholders for the entire amount of the principal and interest of the bends in their possession yet it is manifest that Mr. Butler, in using this language, considered that a payment of a part of the debt by taxation, and a charging of the residue exclusively on the lands and revenues of the canal, would embrace the, eventual payment of the whole, and that he was willing to take the risk of the Canal's paying its part of the debt. Conclusive evidence of this is found in the com"'! iiarafKraxilt nronrusifipn. Tho flrcf fi»ic»giapU Ol tho propoeifcion having provided for the payment of the interest of one-half of the debt from the revenues of the State, the second reads as follows, to-wit: "2. The remaining two and a half per cent, on the principal of the bonds computing from first of January, 1841, shall be changeable against and paid outof the revenues^of the Canal, and shall not be otherwise chargcablc against the State."

Mr. Butler adds in a subsequent sentence "As such reliance is proposed to be placed on the Wabash and Erie Canal by the bondholders for the payment of one-half of the back and accruing interest, it is proper to say that its completion is deemed essential to the plan of liquidation contemplated, &c."

I now call your attention to the interpretation placed on the adjustment by Mr. Secristin the report which he submitted and in which he urged the adoption of the bill, which subsequently passed. The following language is used in the report, viz "This proposition is substantially to release the general revenues of the State* and her public faith from one-half of the entire funded debt, and make the same a charge against the Erie, Wabash and Ohio Canal in Indiana. In ellect, it is the same as taking one-half of the public debt from the shoulders of our tax payers and placing it upon this canal—a work from which the State has not yet realized any income whatever, though it is to be hoped that under judicious management it may be made to yield a handsome revenue. In addition to this, the bondholders arc willing to take the canal aud its lauds (and absolutely, but in trust, ainl finish' the work through to the Ohio river, advancing one-third or more of the cost ol' completion in cash and us n» the lands for the balance so far as practicable aud taking their recourse for this advance, not against the the State, but only against the lands and revenues of the canal thus advancing money to the canal on the security ot tho Con"tcss grants or lands without imposing any further debt upon the State, but on"the" contrary, in effcct leaving our debt less by one-half than it now is."

The provisions of the bill accompanying this report show that Mr. Secrist did not misunderstand or misinterpret it. The bill shows in divers sections by affirmative as well as by negative expressions, that the Canal was charged exclusively with the payment of onehalt the interest of the entire debt, and that the State and her plighted faith were discharged from the same.

show that from the

very inception of these negotiations, and, indeed, before their inception, the idea was held out to the people of the State, that her creditors were wiliing to charge

By tiie 32d section of January 19,184G, the State reserved the right to charge exclusively upon the revenues of the Canal one-hulf of the principal of the entire debt. This was to be done by calling in and requiring to be surrendered the stocks which wight be issued under the first section of the act, and giving to the holders in lieu of them new certificates for one-half of the principal thereof, to bear interest at and after the rate of five per cent, per annum, the principal and interest to be charged on the revenues of the State and, also, by giving to each such holder another certificate for the other half of the principal of such stock to bear a like interest of five per cent.

and to he paid and redeemed, and only paid a]id redeemed o\U of mid eanal lands, and the tqlls and revenues of said canal and from and after the time that the State shall call in said stock issued under the first section of this act, and shall issue new certificates, as afore said, the State, its faith and revenues shall be on'y pledged and responsible for the payment jof onr-'ialf of the principal and interest at five per centum per annum thereon and for the other half of said principal and interest, the holders of said certificates shall look solely and exclusively to said canal land aud the tolls and revenues of said canal.

The said act of January 19, 1846, was submitted to a committee of European bondholders l»y Mr. Butler, and the comI) f* 2V «.

mittee, at a meeting held in London, May 30.1846, formally resolved to concur in the principles laid dowu in the act of the .Legislature passed at Indianapolis on the li)th of January, for the adjustment of the debt of that State (Indiana) by tiie payment of one moiety of the principal and interest by taxation, and the other moiety by the "property aud tolls of the caual from the State line unjoining Ohio to EvausviHe on the Ohio river such property to be assigned to three trustees, and the State to be freed from responsibility on that portion of the debt and interest so to be secured."

This resolution was communicated to Governor YVhitcomb, who, in his message, delivered December 2d, 1848, submitted it to the Legislature and construed it to mean that the State was to be freed from all responsibility on that portion of the debt and interest, which was to be charged to the causl.

The supplemental act of January 23, 1847, is chiefly the work of the London committee, and tho very first section in the exercise of the option reserved to the State by the thirty second section of the original act, declares that one-half the principal of the debt shall be charged upon the Treasury of the State, and the other half upon the Canal lands and tolls and revenues of the Canal, as provided in the 32d section of the original act, and that upon the surrender of the State bonds then outstanding, two certificates shall be issued to each holder, each for one halfof the principal, one chargeable on the Treasury of the State and the other on the Canal, its lands and revenues.

The following extract from the message of Governor Whitcomb, delivered to the General Assembly on the lltli day of January 1848, not only shows tho same construction of the arrangement, but, in a few brief sentences, explains the difference between the original and supplemental bill. The extract is in these words, viz.: "But while the original bill gave the State the option of afterwards throwing one-half of the principal also upon the Canal for payment by the supplementary bill (and consequently by the Jaw as it now stands), that object is at once effected by one-half of the.surrendered debt, both principal and interest, resting exclusively upon the Canal for payment, the State being released from all further responsibility in relation to it. The great and leading principle, therefore, of the first bill, namely, tne satisfying of one-half of the surrendered debt from the Canal remains unchanged, nor does the supplementary bill involve the State any fur-, ther in debt. The main difference between the bills consists in thelattergiving to the bondholders, whoshouldfinish the Canal, a priority in the payment of their claims and expenses of its construction oat of the tolls and profits, over those who would not join in its construction."

The character of tiie bonds surrendered aud the stocks received in lieu thereof, prove the same theory. The bonds surrendered pledged the faith of the State for their payment, and mortgaged the public works to secure the performance of that pledge. The Caual stocks received in lieu of one-lialf of the principal of these bonds so surrendered contain no promise on the part of the State to to pay the amount named in the certificates of stock, no pledge of the faith of the State for that purpose, no lien on any of the public works of the State, except the Canal, but the whole obligation is expressed in these words, "that the Wabash and Erie Canal, and all tolls, lands ?i?£'eftate Ifne "toEvansviHe," &e., are 1 irrevocably pledged in virtue of said acts, &c., to A. B., &c., and his assigns, for the sum of $1,000," &c.

It is a well established principle of law, independently of statutory enactments, that when a mortgage contains no covenant or promise to pay the mortgage money, and tbere is no such covenant or promise in any other®paper, the mortgagor, although he may redeem the mortgaged premises, is not personally bound, and the mortgagee must look exclusively to tho mortgaged property fer satisfaction.

The last reference I shall make in proof of the first proposition is to an opinion of the Supreme Court of the Uniied ^States in the case mentioned in a former part of this communication, viz.: The Trustees of the Wabash and Erie Canal against Beers. 2d Black, 4i)l.

In that case, the courk, in incidentally construing this very Butler bill, speaking of the surrender under it by one of the parties to the suit of certain bonds of the State, uses this language The holders of the latter bonds believe that with the §200,000 lion prior to theirs, they would improve their condition by taking the State for one-half the debt, and tho canal stock certificates lor tho other."

The second proposition is, that the State has not, since the adjournment of 1847, by the incorporation of mil road companies, or by any other act of hers, according to any recognized rule of law. or any established principle of equity jurisprudence, created a liability on her part to pry any portion of the debt charged upon the canal. It is a principle of public law which this State has no disposition to gainsay or evade, that a sovereignty which cannot be sued is bound In "the performance of her contracts to do, and omit every thing which individual persons, under similar circumstanccs, could be compelled by action at aw or suit in equity to do, or lo refrain from doing. We insist, however, that the good faith and honor of the State do not demand anything beyond tho requirements of this rule aud that Indiana, in the matter complained of, has done nothing which a natural person could have been compelled to omit, and has omitted nothing which such a person could have been compelled by judicial proceedings, under similar circumstances to do.

The memorial of the holders of the canal stocks, bases their claim exclusively uoon the assumption tliat Indiana has wrongfully and in violation of her covenants contained in the Butler bill, authorized the construction ot a system of railroads, which, coming in competition with the Wabash and Ene Canal, has so impaired its revenues as to destroy its value as a security.. That railroads have been built in this State by incorporated companies organized or assuming to act under State laws passed since the transfer of the Canal to tiie trustees, cannot be denied, and it must be admitted that one of these roads does come in direct competition with the anal, and has largely contributed to the reduction of its revenues. With this admission, however, we insist that there is no stipulation in the Butler bill or elsewhere, restraining the State from de\eloping her resources by directing State action, or by authorizing their construction by incorporated companies. Covenants or stipulations must be constructed in reference to the main scope and body of the instrument in which they are contained, and cannot by wrestin"'tliejn from the contest, be made to

apply

to matters not contemplated by the parties, and which would not have been agreed to if they had been suggested prior to

the

closing of the contract. The memorialists, to make out a breach of covenant on the part of the State, rely upon the stipulations contained in the fourteenth section of the Supplemental Act of January 27, 1847, but omit the recitals which give significance to the language employed and to sustain ther construe tion they enlarge the scope of the stipulations therein contained, in a manner

that no lawyer would pretend to do in constructing a contr.ict between individuals. Covenants in restraint of any lawful business or trade sire never implied, and -when clearly expressed, are considered to be against public policy, and therefore strictly construed against him. who seek to enforce the restraint. Here is an arrangement made between the State and a portion of-her creditors, not before the invention of railroads, but after their praotical introduction into ibis State, whereby, with the assent of the creditors, one-half of the debt of the State is charged on the revenues and treasury of the State, and the other half exclusively upon the Wabash and Erie Canal, its lands and revenues, without a word being said in legislation, or i:i the liegotiaiions which led to it, about the State being restrained in her right to make railroads, or to authorize others to build them within her limits and yet it is insisted that the covenants made by the State, in relation to the things she did agree to do, or omit, are to be extended by construction or implication, so as to embrace a covenant to abdicate her sovereignty and refrain forever, or so long as the arrangement should continue, from buildinar, or permitting to be built, any of these great instruments of modern civilization ant progress, which might compete with said canal, or impair its revenues.

Suppose Mr. iiutler, in his negotiations with the Legislature, had made it a part ot one of his propositions that the State should never build, or authorize the building of a railroad within her limits, that should, to any extent, areat or small, come in competition with the Wabash and Erie Canal, is it not certain that the proposition, so long as it contained such a leature, would have been promptly rejected. The construction contended, for is monstrous. Indiana never expressly or by implication stipulated to stand in'the way of her own development, or of the devefopmont of the nation, by prohibiting railroads from being built within her borders that might come in competition with the Wabash and Erie Canal.

If, however, for the sake of tho argument,, v/e admit tho construction contended for by the memorialists, still there is another complete and perfect answer to the claim made bjr them. Jt is notorious that since tho transfer ot tho Wabash and Erie Canal to tho Trustees, the State has not made a single mile of railroad. It is equally true that no line of railroad has been constructed within the State by any organized company which can, in any just or proper sense be said to come in competition with said canal, except the Wabash Valley Road. This road does run parallel with and near the canal from Fort Wayne, in Allen county, to Attica, in Fountain county, a distance of about 130 miles. If it shall be said that the Evansviile & Crawfordville Railroad, extending from Evansviile to Terre Haute, is also a competitor of the canal, the reply is, that the Canal from Terre Haute to Evansviile was a failure from the beginning, and never was in a condition to compete with a good wagon road between the two points above named. This reduces the grounds of complaint to the failure of the State to prevent the construction of the Wabash Valley Railroad.

The Constitution of the State was amended in 1851 so as to prohibit the incorporation of railroad or other companies by local or special legislation, but allowing their organization under general laws to bo passed for that purpose. By reason of this, the General Assembly, in 1858, passed a general railroad law 00 'orgaliiztu.- *li iiicic "nas legislative authority for the building of the Wabash Valley Railroad, it was derived from this general law, for it is certain that no special charter was ever given for that purpose. It either was or was not apart of "the contract between the State and the holders of the Canal stocks that the State should neither build or authorize the building of any railroad that might compete with the Canal. If it was not a part of the contract that the State should be thus restrained, then the claim made by this memorial falls to the ground. If the contract did restrain the State as contended for, then the question arises whether the general railroad law of 1832 authorized the building of the Wabash Valley Railroad. It must be admitted that said law is general in its terms, and contains no express restriction on the subject ot lines of railroads that might compete with the canal, and yet I insist that the general railroad law could not and did not authorize the building of any railroad the construction of which was interdicted by a valid Hibsisting contract made by the State. If the State by the arrangement of 184/, contracted that no such improvement as the alley Railroad should be made, a subsequent authorization by the State of the making of the road would be an attempt to license by State law the impairing of the obligation of a contract, a thing which every State is, by the express terms of the Constitution'of the United States, inhibited from doing.

It is not to be presumed that the Staie intended to pass an unconstitutional act, and if the general railroad law is susceptible of two constructions, the one constitutional and the other unconstitutional,'the former interpretation must be adopted and the latter rejected. Upon the theory, then, that the State was by her-con tract restrained from authorizing a railroad to be built that would compete with the Wabash & Erie Canal, and thereby diminish its revenues, the general railroad law of 1852, although unrestricted in its terms must be constructed to apply only to such lines of road as it was competent for the Staie to authorize without impairing the obligation of any contract. Upon the assumption that the building of competing roads was prohibited by the contract and upon the construction of the general railroad law of 1852, just suggested, it follows that the construction of the Wabash Valley Railroad was unauthorized by that act, and was therefore, an illegal act which the Trustees of the Canal—two of whom are selected by the holders of the Canal stocks—or the stockholders themselves could have restrained by injunction. The Railroad, of the construction of which complaint is made, was built, not by the State, but by person acting or assuming to act as a Corporation under a pretended authority from the State, and these per.-ons were amenable to civil process, and the Federal and Stote Courts were open to the memorialists and could have afforded them a complete remedy, by injunction, for what they now "say was an irreparable injury, doiie by authority of the State?

Suppose the Wabash Valley Railrad Company, instead of constructing their road on the line which it now occupies, had located and commenced constructing it on the towing path, or in the bed of the Wabash and Erie Canal, could the Canal Trustees and the holders of the Canal Stocks have stood by and witnessed such an appropriation of the canal under the pretense that it was authorized by the State, and then make tins tort of the Railroad Company the basis of a claim against the State.

If the holders of the canal stocks had vested rights in the canal, as they insist in their memorial, then the State did not and could not authorize their destruction, and, with the courts open to them, it is marvelous that they stood by and witnessed this destruction Wfjtftout an effort to prevent it* Suoh oord»icHs only consistent with the theory that they them

road

selves believed that tho acts now conipiaio.ed of were not a violation of the State's covenants, hut what the lawyers term damnum absque injuria, that is, a loss without an injury, a loss for which neither the State nor any other person is responsible.

My apology for the length of this presentation is that tho press of New York and London have been used to give cur-|-rencv to the imputation that Indiana, in refusing to charge these eanal stocks upon her Treasury, is guilty of repudiation, and it seemed proper "that the public should ho informed through some official channel, of tho views entertained by our people, together with the grounds upon which they arc based.

Before dismissing the subject, I earnestly recommend the passage of a joint resolution proposing an amendment to the Constitution so as to declare that no act of legislation shall ever take effect or become a law of this State whereby said Canal stocks, or any part thereof, shall be recognized as a debt of the State, or ehnrgp[F upon the Treasury thereof by way of redeeming said caual or otherwise, until such act of legislation shall "lave been submitted to and ratified by the qualified electors of this State at a special election to be held for that purpose in pursuance of law, a majority of the votes cast, at such election to be necessary to effect the ratification.

SINKING FUND.

The report of tho Auditor of State shows the condition, of the Sinking Fund to be as follows Money on hand $.30,010 SO Amount secured to the fancl by notes sm-t mortgages 2f(»,9ll 2-5 Due from State for sleeks redeemed with the fund, lor which no bond lias been issued to the 8eliool Fund by the State 13-3,306 67 Due from, the State for advance to

Southern Prison to repair the damages done by tire J2.C00 00 Due from the State to complete Supreme Court rooms, &c.. «,S02 30

Total ?!I12,0*J7 14 From which, deduct amount in tlu fund belonging to owners of mortgaged property sold, the sales being in excess of amounts due. -i.lH lo Net balance of moneys and effects in the hands of the Auditor $007,012 01

I recommend that tho amount due to the fund for State stocks redeemed, be secured by a non-negotiable bond from the State to the School Fund that the other small sums duo from the State be immediately refundod to the Sinking Fund by an appropriation for that purpose and that the moneys on hand, and the uncollected securities, as fast as realized, be invested in tho registered interest bearing bonds of the United States, so that the Fund may be made productive, and tho income thereof distributed lor common school purposes.

The wisdom of making the Auditor instead of the Treasurer of State, the treasurer of this particular fund, is not very apparent, aud I hope the fund may bo transferred to the Treasury, and its prompt investment secured by proper investments. [CONCLUDED ON MONDAY.]

Yamlalia Route East—St. Louis, Vandalia, Terre Haute and Indianapolis Railroad.

The Missouri Democrat, in an article on this popular road, and its efficient management under its able President, W. R. McKeeu, says "The completion of this lino has given to St. Louis one of its most imfjortant business tributaries. It is located through St. Clair, Madison, Bond, Fayette, Effing-ham,-Cumberland and Clark counties, IIveu_au(, jti'vb/illd JVatdonal Road, and was hiall pwposkr^-^ourcitizen* "Air-Line ltoad." Singular as it may appear the great merits of this road defeated 'its building for years, owing to combinations of those interested in lines running north and south of it, who successfully urged- that tho Vandalia road would be built without legislative aid, and bv private enterprise. At Terre Hauto it joins the Terre Haute and Indianapolis railroad, tho old lino, noted throughout the country as one of the best constructed railroads in tho United States. From St. Louis to Indianapolis it is now under one management, having been consolidated as one company.

The road passes through one of the finest agricultural districts of Illinois, which vTill now be l'ully developed, as the completion of tho road gives them the advantage of the principal markets ol tho West. The Indiana division passes through aseetion noted for the superiority of its poplar and walnut lumber, and for its inexhaustible coal fields. Tho block cool ot Clay county is celebrated as one of tho very best used for manufacturing purposes, in all branches where coal is used. The rail

company is prepared to offer every facility in the way of transportation, and we hope to see our business men availing themselves of the advantages offered to them.

The tonnage for the past year, running only ninetv-eight miles(to Effingham), up to June 14th, at which time the entire lino was completed, is as lollows Amount forwarded j'*' Amount received l»,io.».o ms. 2jM,iWI,327 lbs.

Total

Terre Haute was two years, as fol-

The Vandalia road to built during the past lows ISOO—fo Eflingham 1870—Fffimihaiu to Terre Haute...... ....

03 miles

Terre Haute to Indianapolis, old

Distance to Indianapolis 238 miles This inaugurated the running of TITUOl'GII r* ASSKJ-TfiKI! CAI5S FROM SI,

I,OUIR TO NEW YORK,

an advantage never before offered to St. Louis, and for this merits a most liberal patronage from our citizens. Tho route over which tho through car runs is via Columbus, the Pan-JIanelo and Pennsylvania Central railroad, this being claimed as the shorest route between St. Louis and the East. Wo give tho distance to the principal points, as lollows

FROM ST I.OUIS TO

fnd ian apol is es 4I' Pittsburgh ''JPhiladelphia New York....

In addition to the present arrangement of through cars to New York in connection with the evening train, it is now proposed to establish a morning line of through cars by the same route, j'idlman's palace cars are also run through to Louisville and Cincinnati, ar.d in connection with the Illinois Central via Ellimrham, trains run through to Chicago without change.

Our citizens have every reason to congratulate themselves upon the completion of the Vandalia line, as it is a live inttdvtiori, and under the management ol efficient and competent officers. jfOXE Aninvitation was extended early in December to all of the railroad companies running into this city to malte a report of their progress for 1870. With those companies who have failed to make the required response rests the responsibility for their non-appearance in these columns this morning.

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